215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/513a10) (from Ch. 73, par. 1065.60a10)

Sec. 513a10. Maximum service charge.

(a) No service charge shall be made for financing premiums other than as permitted by this Article.

(b) The service charge is to be computed on the principal balance from the effective date of the insurance coverage for which the premiums are being advanced to and including the date when the final installment of the premium finance agreement is payable.

(c) The service charge shall be a maximum of $10 per $100 per year plus an allowable charge as follows:

(d) The service charge or any other charge made by the licensee does not have to be refunded upon cancellation or prepayment. The allowable charge is considered to be part of the service charge.

(e) A premium finance agreement may provide for a delinquency charge of not less than $1 nor more than 5% of any installment in default for more than 5 days.

(f) Any other charges shall be disclosed in the premium finance agreement.

(Source: P.A. 87-811.)

(215 ILCS 5/513a11) (from Ch. 73, par. 1065.60a11)

Sec. 513a11. Cancellation requirements upon default.

(a) When a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts listed in the premium finance agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless the request for cancellation is effectuated under this Section.

(b) Not less than 10 days written notice shall be mailed to the named insured of the intent of the premium finance company to cancel the insurance contract unless the default is cured within the 10 day period.

(c) After expiration of the 10 day period, the premium finance company may request, in the name of the named insured, cancellation of the insurance contract or contracts by mailing or hand delivering to the insurer a request for cancellation, and the insurance contract shall be cancelled as if the request for cancellation had been submitted by the named insured, but without requiring the return of the insurance contract or contracts. The premium finance company shall also mail a copy of the request for cancellation to the named insured at his last known address.

(d) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under provisions of this Section. The insurer shall give the notice to any governmental agency, mortgagee, or other third party on or before the fifth business day after it receives the notice of cancellation from the premium finance company. For purposes of this Section, any governmental agency, mortgagee, or other third party may opt to receive notices electronically.

(e) In the event that the collection of return premiums for the account of the named insured results in a surplus over the amount due from the named insured, the premium finance company shall refund the excess to the named insured; however, no refund is required if it amounts to less than $5.

(f) All cancellation provisions required of the premium finance company and insurer are applicable to any policy to which Section 143.11 applies.

(Source: P.A. 93-713, eff. 1-1-05.)

(215 ILCS 5/513a12) (from Ch. 73, par. 1065.60a12)

Sec. 513a12. Books and records.

(a) Until payment in full and 3 years thereafter every licensee shall maintain each premium finance agreement or duplicate originals thereof and all original documents relating thereto (except those papers returned to the insured) so as to be readily available for examination by the Director.

(b) Every licensee shall maintain a register, ledger, or combination of records for each premium finance agreement that can readily show:

(1) the date of acquisition;

(2) the name of the insured;

(3) the identifying number;

(4) the principal balance;

(5) the amount of all charges assessed;

(6) the balance; and

(7) a distribution of proceeds showing the dates, amounts, and names of the persons to whom any part of the proceeds were distributed.

(Source: P.A. 87-811.)

(215 ILCS 5/513a13)

Sec. 513a13. Electronic delivery of notices and documents.

(a) As used in this Section:

"Delivered by electronic means" includes:

(1) delivery to an electronic mail address at which a party has consented to receive notices or documents; or

(2) posting on an electronic network or site accessible via the Internet, mobile application, computer, mobile device, tablet, or any other electronic device, together with separate notice of the posting, which shall be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.

"Party" means any recipient of any notice or document required as part of a premium finance agreement including, but not limited to, an applicant or contracting party. For the purposes of this Section, "party" includes the producer of record.

(b) Subject to the requirements of this Section, any notice to a party or any other document required under applicable law in a premium finance agreement or that is to serve as evidence of a premium finance agreement may be delivered, stored, and presented by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act.

(c) Delivery of a notice or document in accordance with this Section shall be considered equivalent to delivery by first class mail or first class mail, postage prepaid.

(d) A notice or document may be delivered by electronic means by a premium finance company to a party under this Section if:

(1) the party has affirmatively consented to that method of delivery and has not withdrawn the consent;

(2) the party, before giving consent, is provided with a clear and conspicuous statement informing the party of:

(A) the right of the party to withdraw consent to have a notice or document delivered by electronic means, at any time, and any conditions or consequences imposed in the event consent is withdrawn;

(B) the types of notices and documents to which the party's consent would apply;

(C) the right of a party to have a notice or document delivered in paper form; and

(D) the procedures a party must follow to withdraw consent to have a notice or document delivered by electronic means and to update the party's electronic mail address;

(3) the party:

(A) before giving consent, is provided with a statement of the hardware and software requirements for access to, and retention of, a notice or document delivered by electronic means; and

(B) consents electronically, or confirms consent electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and

(4) after consent of the party is given, the premium finance company, in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies:

(A) provides the party with a statement that describes:

(i) the revised hardware and software requirements for access to and retention of a notice or document delivered by electronic means; and

(ii) the right of the party to withdraw consent without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and

(B) complies with paragraph (2) of this subsection (d).

(e) Delivery of a notice or document in accordance with this Section does not affect requirements related to content or timing of any notice or document required under applicable law.

(f) The legal effectiveness, validity, or enforceability of any premium finance agreement executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subparagraph (B) of paragraph (3) of subsection (d) of this Section.

(g) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective.

A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the premium finance company.

Failure by a premium finance company to comply with paragraph (4) of subsection (d) of this Section and subsection (j) of this Section may be treated, at the election of the party, as a withdrawal of consent for purposes of this Section.

(h) This Section does not apply to a notice or document delivered by a premium finance company in an electronic form before the effective date of this amendatory Act of the 100th General Assembly to a party who, before that date, has consented to receive notice or document in an electronic form otherwise allowed by law.

(i) If the consent of a party to receive certain notices or documents in an electronic form is on file with a premium finance company before the effective date of this amendatory Act of the 100th General Assembly and, pursuant to this Section, a premium finance company intends to deliver additional notices or documents to the party in an electronic form, then prior to delivering such additional notices or documents electronically, the premium finance company shall:

(1) provide the party with a statement that describes:

(A) the notices or documents that shall be delivered by electronic means under this Section that were not previously delivered electronically; and

(B) the party's right to withdraw consent to have notices or documents delivered by electronic means without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and

(2) comply with paragraph (2) of subsection (d) of this Section.

(j) A premium finance company shall deliver a notice or document by any other delivery method permitted by law other than electronic means if:

(1) the premium finance company attempts to deliver the notice or document by electronic means and has a reasonable basis for believing that the notice or document has not been received by the party; or

(2) the premium finance company becomes aware that the electronic mail address provided by the party is no longer valid.

(k) The producer of record shall not be subject to civil liability for any harm or injury that occurs as a result of a party's election to receive any notice or document by electronic means or by a premium finance company's failure to deliver a notice or document by electronic means unless the harm or injury is caused by the willful and wanton misconduct of the producer of record.

(l) This Section shall not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, as amended.

(Source: P.A. 102-38, eff. 6-25-21.)

(215 ILCS 5/Art. XXXIIB heading) ARTICLE XXXIIB. PHARMACY BENEFIT MANAGERS (Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b1)

Sec. 513b1. Pharmacy benefit manager contracts.

(a) As used in this Section:

"340B drug discount program" means the program established under Section 340B of the federal Public Health Service Act, 42 U.S.C. 256b.

"340B entity" means a covered entity as defined in 42 U.S.C. 256b(a)(4) authorized to participate in the 340B drug discount program.

"340B pharmacy" means any pharmacy used to dispense 340B drugs for a covered entity, whether entity-owned or external.

"Biological product" has the meaning ascribed to that term in Section 19.5 of the Pharmacy Practice Act.

"Maximum allowable cost" means the maximum amount that a pharmacy benefit manager will reimburse a pharmacy for the cost of a drug.

"Maximum allowable cost list" means a list of drugs for which a maximum allowable cost has been established by a pharmacy benefit manager.

"Pharmacy benefit manager" means a person, business, or entity, including a wholly or partially owned or controlled subsidiary of a pharmacy benefit manager, that provides claims processing services or other prescription drug or device services, or both, for health benefit plans.

"Retail price" means the price an individual without prescription drug coverage would pay at a retail pharmacy, not including a pharmacist dispensing fee.

"Third-party payer" means any entity that pays for prescription drugs on behalf of a patient other than a health care provider or sponsor of a plan subject to regulation under Medicare Part D, 42 U.S.C. 1395w-101 et seq.

(b) A contract between a health insurer and a pharmacy benefit manager must require that the pharmacy benefit manager:

(1) Update maximum allowable cost pricing information at least every 7 calendar days.

(2) Maintain a process that will, in a timely manner, eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data used in formulating maximum allowable cost prices and product availability.

(3) Provide access to its maximum allowable cost list to each pharmacy or pharmacy services administrative organization subject to the maximum allowable cost list. Access may include a real-time pharmacy website portal to be able to view the maximum allowable cost list. As used in this Section, "pharmacy services administrative organization" means an entity operating within the State that contracts with independent pharmacies to conduct business on their behalf with third-party payers. A pharmacy services administrative organization may provide administrative services to pharmacies and negotiate and enter into contracts with third-party payers or pharmacy benefit managers on behalf of pharmacies.

(4) Provide a process by which a contracted pharmacy can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing. The appeals process must, at a minimum, include the following:

(A) A requirement that a contracted pharmacy has 14 calendar days after the applicable fill date to appeal a maximum allowable cost if the reimbursement for the drug is less than the net amount that the network provider paid to the supplier of the drug.

(B) A requirement that a pharmacy benefit manager must respond to a challenge within 14 calendar days of the contracted pharmacy making the claim for which the appeal has been submitted.

(C) A telephone number and e-mail address or website to network providers, at which the provider can contact the pharmacy benefit manager to process and submit an appeal.

(D) A requirement that, if an appeal is denied, the pharmacy benefit manager must provide the reason for the denial and the name and the national drug code number from national or regional wholesalers.

(E) A requirement that, if an appeal is sustained, the pharmacy benefit manager must make an adjustment in the drug price effective the date the challenge is resolved and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the managed care organization or pharmacy benefit manager.

(5) Allow a plan sponsor contracting with a pharmacy benefit manager an annual right to audit compliance with the terms of the contract by the pharmacy benefit manager, including, but not limited to, full disclosure of any and all rebate amounts secured, whether product specific or generalized rebates, that were provided to the pharmacy benefit manager by a pharmaceutical manufacturer.

(6) Allow a plan sponsor contracting with a pharmacy benefit manager to request that the pharmacy benefit manager disclose the actual amounts paid by the pharmacy benefit manager to the pharmacy.

(7) Provide notice to the party contracting with the pharmacy benefit manager of any consideration that the pharmacy benefit manager receives from the manufacturer for dispense as written prescriptions once a generic or biologically similar product becomes available.

(c) In order to place a particular prescription drug on a maximum allowable cost list, the pharmacy benefit manager must, at a minimum, ensure that:

(1) if the drug is a generically equivalent drug, it is listed as therapeutically equivalent and pharmaceutically equivalent "A" or "B" rated in the United States Food and Drug Administration's most recent version of the "Orange Book" or have an NR or NA rating by Medi-Span, Gold Standard, or a similar rating by a nationally recognized reference;

(2) the drug is available for purchase by each pharmacy in the State from national or regional wholesalers operating in Illinois; and

(3) the drug is not obsolete.

(d) A pharmacy benefit manager is prohibited from limiting a pharmacist's ability to disclose whether the cost-sharing obligation exceeds the retail price for a covered prescription drug, and the availability of a more affordable alternative drug, if one is available in accordance with Section 42 of the Pharmacy Practice Act.

(e) A health insurer or pharmacy benefit manager shall not require an insured to make a payment for a prescription drug at the point of sale in an amount that exceeds the lesser of:

(1) the applicable cost-sharing amount; or

(2) the retail price of the drug in the absence of prescription drug coverage.

(f) Unless required by law, a contract between a pharmacy benefit manager or third-party payer and a 340B entity or 340B pharmacy shall not contain any provision that:

(1) distinguishes between drugs purchased through the 340B drug discount program and other drugs when determining reimbursement or reimbursement methodologies, or contains otherwise less favorable payment terms or reimbursement methodologies for 340B entities or 340B pharmacies when compared to similarly situated non-340B entities;

(2) imposes any fee, chargeback, or rate adjustment that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;

(3) imposes any fee, chargeback, or rate adjustment that exceeds the fee, chargeback, or rate adjustment that is not similarly imposed on similarly situated pharmacies that are not 340B entities or 340B pharmacies;

(4) prevents or interferes with an individual's choice to receive a covered prescription drug from a 340B entity or 340B pharmacy through any legally permissible means, except that nothing in this paragraph shall prohibit the establishment of differing copayments or other cost-sharing amounts within the benefit plan for covered persons who acquire covered prescription drugs from a nonpreferred or nonparticipating provider;

(5) excludes a 340B entity or 340B pharmacy from a pharmacy network on any basis that includes consideration of whether the 340B entity or 340B pharmacy participates in the 340B drug discount program;

(6) prevents a 340B entity or 340B pharmacy from using a drug purchased under the 340B drug discount program; or

(7) any other provision that discriminates against a 340B entity or 340B pharmacy by treating the 340B entity or 340B pharmacy differently than non-340B entities or non-340B pharmacies for any reason relating to the entity's participation in the 340B drug discount program.

As used in this subsection, "pharmacy benefit manager" and "third-party payer" do not include pharmacy benefit managers and third-party payers acting on behalf of a Medicaid program.

(g) A violation of this Section by a pharmacy benefit manager constitutes an unfair or deceptive act or practice in the business of insurance under Section 424.

(h) A provision that violates subsection (f) in a contract between a pharmacy benefit manager or a third-party payer and a 340B entity that is entered into, amended, or renewed after July 1, 2022 shall be void and unenforceable.

(i)(1) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information in a court, in an administrative hearing, before a legislative commission or committee, or in any other proceeding, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.

(2) A pharmacy benefit manager may not retaliate against a pharmacist or pharmacy for disclosing information to a government or law enforcement agency, if the pharmacist or pharmacy has reasonable cause to believe that the disclosed information is evidence of a violation of a State or federal law, rule, or regulation.

(3) A pharmacist or pharmacy shall make commercially reasonable efforts to limit the disclosure of confidential and proprietary information.

(4) Retaliatory actions against a pharmacy or pharmacist include cancellation of, restriction of, or refusal to renew or offer a contract to a pharmacy solely because the pharmacy or pharmacist has:

(A) made disclosures of information that the pharmacist or pharmacy has reasonable cause to believe is evidence of a violation of a State or federal law, rule, or regulation;

(B) filed complaints with the plan or pharmacy benefit manager; or

(C) filed complaints against the plan or pharmacy benefit manager with the Department.

(j) This Section applies to contracts entered into or renewed on or after July 1, 2022.

(k) This Section applies to any group or individual policy of accident and health insurance or managed care plan that provides coverage for prescription drugs and that is amended, delivered, issued, or renewed on or after July 1, 2020.

(Source: P.A. 102-778, eff. 7-1-22; 103-154, eff. 6-30-23; 103-453, eff. 8-4-23.)

(215 ILCS 5/513b2)

Sec. 513b2. Licensure requirements.

(a) Beginning on July 1, 2020, to conduct business in this State, a pharmacy benefit manager must register with the Director. To initially register or renew a registration, a pharmacy benefit manager shall submit:

(1) A nonrefundable fee not to exceed $500.

(2) A copy of the registrant's corporate charter, articles of incorporation, or other charter document.

(3) A completed registration form adopted by the Director containing:

(A) The name and address of the registrant.

(B) The name, address, and official position of each officer and director of the registrant.

(b) The registrant shall report any change in information required under this Section to the Director in writing within 60 days after the change occurs.

(c) Upon receipt of a completed registration form, the required documents, and the registration fee, the Director shall issue a registration certificate. The certificate may be in paper or electronic form, and shall clearly indicate the expiration date of the registration. Registration certificates are nontransferable.

(d) A registration certificate is valid for 2 years after its date of issue. The Director shall adopt by rule an initial registration fee not to exceed $500 and a registration renewal fee not to exceed $500, both of which shall be nonrefundable. Total fees may not exceed the cost of administering this Section.

(e) The Department shall adopt any rules necessary to implement this Section.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b3)

Sec. 513b3. Examination.

(a) The Director, or his or her designee, may examine a registered pharmacy benefit manager.

(b) Any pharmacy benefit manager being examined shall provide to the Director, or his or her designee, convenient and free access to all books, records, documents, and other papers relating to such pharmacy benefit manager's business affairs at all reasonable hours at its offices.

(c) The Director, or his or her designee, may administer oaths and thereafter examine the pharmacy benefit manager's designee, representative, or any officer or senior manager as listed on the license or registration certificate about the business of the pharmacy benefit manager.

(d) The examiners designated by the Director under this Section may make reports to the Director. Any report alleging substantive violations of this Article, any applicable provisions of this Code, or any applicable Part of Title 50 of the Illinois Administrative Code shall be in writing and be based upon facts obtained by the examiners. The report shall be verified by the examiners.

(e) If a report is made, the Director shall either deliver a duplicate report to the pharmacy benefit manager being examined or send such duplicate by certified or registered mail to the pharmacy benefit manager's address specified in the records of the Department. The Director shall afford the pharmacy benefit manager an opportunity to request a hearing to object to the report. The pharmacy benefit manager may request a hearing within 30 days after receipt of the duplicate report by giving the Director written notice of such request together with written objections to the report. Any hearing shall be conducted in accordance with Sections 402 and 403 of this Code. The right to a hearing is waived if the delivery of the report is refused or the report is otherwise undeliverable or the pharmacy benefit manager does not timely request a hearing. After the hearing or upon expiration of the time period during which a pharmacy benefit manager may request a hearing, if the examination reveals that the pharmacy benefit manager is operating in violation of any applicable provision of this Code, any applicable Part of Title 50 of the Illinois Administrative Code, a provision of this Article, or prior order, the Director, in the written order, may require the pharmacy benefit manager to take any action the Director considers necessary or appropriate in accordance with the report or examination hearing. If the Director issues an order, it shall be issued within 90 days after the report is filed, or if there is a hearing, within 90 days after the conclusion of the hearing. The order is subject to review under the Administrative Review Law.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b4)

Sec. 513b4. Denial, revocation, or suspension of registration; administrative fines.

(a) Denial of an application or suspension or revocation of a registration in accordance with this Section shall be by written order sent to the applicant or registrant by certified or registered mail at the address specified in the records of the Department. The written order shall state the grounds, charges, or conduct on which denial, suspension, or revocation is based. The applicant or registrant may in writing request a hearing within 30 days from the date of mailing. Upon receipt of a written request, the Director shall issue an order setting: (i) a specific time for the hearing, which may not be less than 20 nor more than 30 days after receipt of the request; and (ii) a specific place for the hearing, which may be in either the city of Springfield or in the county in Illinois where the applicant's or registrant's principal place of business is located. If no written request is received by the Director, such order shall be final upon the expiration of said 30 days.

(b) If the Director finds that one or more grounds exist for the revocation or suspension of a registration issued under this Article, the Director may, in lieu of or in addition to such suspension or revocation, impose a fine upon the pharmacy benefit manager as provided under subsection (c).

(c) With respect to any knowing and willful violation of a lawful order of the Director, any applicable portion of this Code, Part of Title 50 of the Illinois Administrative Code, or provision of this Article, the Director may impose a fine upon the pharmacy benefit manager in an amount not to exceed $50,000 for each violation.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b5)

Sec. 513b5. Failure to register. Any pharmacy benefit manager that operates without a registration or fails to register with the Director and pay the fee prescribed by this Article is an unauthorized insurer as defined in Article VII of this Code and shall be subject to all penalties provided for therein.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/513b6)

Sec. 513b6. Insurance Producer Administration Fund. All fees and fines paid to and collected by the Director under this Article shall be paid promptly after receipt thereof, together with a detailed statement of such fees, into the Insurance Producer Administration Fund. The moneys deposited into the Insurance Producer Administration Fund may be transferred to the Professions Indirect Cost Fund, as authorized under Section 2105-300 of the Department of Professional Regulation Law of the Civil Administrative Code of Illinois.

(Source: P.A. 101-452, eff. 1-1-20.)

(215 ILCS 5/Art. XXXIII heading) ARTICLE XXXIII. URBAN PROPERTY INSURANCE

(215 ILCS 5/513b7)

Sec. 513b7. Pharmacy audits.

(a) As used in this Section:

"Audit" means any physical on-site, remote electronic, or concurrent review of a pharmacist or pharmacy service submitted to the pharmacy benefit manager or pharmacy benefit manager affiliate by a pharmacist or pharmacy for payment.

"Auditing entity" means a person or company that performs a pharmacy audit.

"Extrapolation" means the practice of inferring a frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors on any portion of claims submitted, based on the frequency of dollar amount of overpayments, underpayments, nonvalid claims, or other errors actually measured in a sample of claims.

"Misfill" means a prescription that was not dispensed; a prescription that was dispensed but was an incorrect dose, amount, or type of medication; a prescription that was dispensed to the wrong person; a prescription in which the prescriber denied the authorization request; or a prescription in which an additional dispensing fee was charged.

"Pharmacy audit" means an audit conducted of any records of a pharmacy for prescriptions dispensed or nonproprietary drugs or pharmacist services provided by a pharmacy or pharmacist to a covered person.

"Pharmacy record" means any record stored electronically or as a hard copy by a pharmacy that relates to the provision of a prescription or pharmacy services or other component of pharmacist care that is included in the practice of pharmacy.

(b) Notwithstanding any other law, when conducting a pharmacy audit, an auditing entity shall:

(1) not conduct an on-site audit of a pharmacy at any time during the first 3 business days of a month or the first 2 weeks and final 2 weeks of the calendar year or during a declared State or federal public health emergency;

(2) notify the pharmacy or its contracting agent no later than 14 business days before the date of initial on-site audit; the notification to the pharmacy or its contracting agent shall be in writing and delivered either:

(A) by mail or common carrier, return receipt requested; or

(B) electronically, not including facsimile, with electronic receipt confirmation and delivered during normal business hours of operation, addressed to the supervising pharmacist and pharmacy corporate office, if applicable, at least 14 business days before the date of an initial on-site audit;

(3) limit the audit period to 24 months after the date a claim is submitted to or adjudicated by the pharmacy benefit manager;

(4) provide in writing the list of specific prescription numbers to be included in the audit 14 business days before the on-site audit that may or may not include the final 2 digits of the prescription numbers;

(5) use the written and verifiable records of a hospital, physician, or other authorized practitioner that are transmitted by any means of communication to validate the pharmacy records in accordance with State and federal law;

(6) limit the number of prescriptions audited to no more than 100 prescriptions per audit and an entity shall not audit more than 200 prescriptions in any 12-month period, except in cases of fraud or knowing and willful misrepresentation; a refill shall not constitute a separate prescription and a pharmacy shall not be audited more than once every 6 months;

(7) provide the pharmacy or its contracting agent with a copy of the preliminary audit report within 45 days after the conclusion of the audit;

(8) be allowed to conduct a follow-up audit on site if a remote or desk audit reveals the necessity for a review of additional claims;

(9) accept invoice audits as validation invoices from any wholesaler registered with the Department of Financial and Professional Regulation from which the pharmacy has purchased prescription drugs or, in the case of durable medical equipment or sickroom supplies, invoices from an authorized distributor other than a wholesaler;

(10) provide the pharmacy or its contracting agent with the ability to provide documentation to address a discrepancy or audit finding if the documentation is received by the pharmacy benefit manager no later than the 45th day after the preliminary audit report was provided to the pharmacy or its contracting agent; the pharmacy benefit manager shall consider a reasonable request from the pharmacy for an extension of time to submit documentation to address or correct any findings in the report;

(11) be required to provide the pharmacy or its contracting agent with the final audit report no later than 90 days after the initial audit report was provided to the pharmacy or its contracting agent;

(12) conduct the audit in consultation with a pharmacist in specific cases if the audit involves clinical or professional judgment;

(13) not chargeback, recoup, or collect penalties from a pharmacy until the time period to file an appeal of the final pharmacy audit report has passed or the appeals process has been exhausted, whichever is later, unless the identified discrepancy is expected to exceed $25,000, in which case the auditing entity may withhold future payments in excess of that amount until the final resolution of the audit;

(14) not compensate the employee or contractor conducting the audit based on a percentage of the amount claimed or recouped pursuant to the audit;

(15) not use extrapolation to calculate penalties or amounts to be charged back or recouped unless otherwise required by federal law or regulation; any amount to be charged back or recouped due to overpayment may not exceed the amount the pharmacy was overpaid;

(16) not include dispensing fees in the calculation of overpayments unless a prescription is considered a misfill, the medication is not delivered to the patient, the prescription is not valid, or the prescriber denies authorizing the prescription; and

(17) conduct a pharmacy audit under the same standards and parameters as conducted for other similarly situated pharmacies audited by the auditing entity.

(c) Except as otherwise provided by State or federal law, an auditing entity conducting a pharmacy audit may have access to a pharmacy's previous audit report only if the report was prepared by that auditing entity.

(d) Information collected during a pharmacy audit shall be confidential by law, except that the auditing entity conducting the pharmacy audit may share the information with the health benefit plan for which a pharmacy audit is being conducted and with any regulatory agencies and law enforcement agencies as required by law.

(e) A pharmacy may not be subject to a chargeback or recoupment for a clerical or recordkeeping error in a required document or record, including a typographical error or computer error, unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health plan managed by the pharmacy benefit manager, or a consumer.

(f) A pharmacy shall have the right to file a written appeal of a preliminary and final pharmacy audit report in accordance with the procedures established by the entity conducting the pharmacy audit.

(g) No interest shall accrue for any party during the audit period, beginning with the notice of the pharmacy audit and ending with the conclusion of the appeals process.

(h) An auditing entity must provide a copy to the plan sponsor of its claims that were included in the audit, and any recouped money shall be returned to the plan sponsor, unless otherwise contractually agreed upon by the plan sponsor and the pharmacy benefit manager.

(i) The parameters of an audit must comply with manufacturer listings or recommendations, unless otherwise prescribed by the treating provider, and must be covered under the individual's health plan, for the following:

(1) the day supply for eye drops must be calculated so that the consumer pays only one 30-day copayment if the bottle of eye drops is intended by the manufacturer to be a 30-day supply;

(2) the day supply for insulin must be calculated so that the highest dose prescribed is used to determine the day supply and consumer copayment; and

(3) the day supply for topical product must be determined by the judgment of the pharmacist or treating provider upon the treated area.

(j) This Section shall not apply to:

(1) audits in which suspected fraud or knowing and willful misrepresentation is evidenced by a physical review, review of claims data or statements, or other investigative methods;

(2) audits of claims paid for by federally funded programs not applicable to health insurance coverage regulated by the Department; or

(3) concurrent reviews or desk audits that occur within 3 business days after transmission of a claim and in which no chargeback or recoupment is demanded.

(Source: P.A. 103-102, eff. 1-1-24.)

(215 ILCS 5/522) (from Ch. 73, par. 1065.69)

Sec. 522. Purpose. This article is to make basic property insurance increasingly available to the citizens of this State, and to deter the insurance industry from geographically redlining urban areas of this State by requiring the restructuring of the Industry Placement Facility and administering the FAIR Plan (Fair Access to Insurance Requirements) to deliver residential property insurance to all citizens of this State on a reasonable access and marketing basis by offering homeowners insurance, by requiring immediate binding of eligible risks, by making use of premium installment payment plans, and by further establishing reasonable service standards in its plan of operation subject to the approval and review of the Director; and, to establish a central operation facility for the equitable distribution of losses and expenses in the writing of the basic property insurance and homeowners insurance in this State.

(Source: P.A. 80-1365.)

(215 ILCS 5/523) (from Ch. 73, par. 1065.70)

Sec. 523. Definitions.) (1) "Basic Property Insurance" means the coverage against direct loss to real or tangible personal property at a fixed location provided in the Standard Fire Policy and Extended Coverage Endorsement and such vandalism and malicious mischief or such other classes of insurance as may be added with respect to the property by the Industry Placement Facility with the approval of the Director, except insurance on automobile, farm and manufacturing risks and it shall include homeowners insurance.

(2) "Homeowners Insurance" means the personal multi-peril property coverages commonly known as Homeowners Insurance.

(3) "Inspection Bureau(s)" means the organization or organizations designated by the Industry Placement Facility with the approval of the Director to make inspections to determine the condition of the properties for which basic property insurance is sought and to perform such other duties as may be authorized by the Industry Placement Facility;

(4) "Industry Placement Facility" or "Facility" means the organization formed by insurers licensed to write and engaged in writing basic property insurance (including multi-peril policies) within the State of Illinois to assist applicants in urban areas in securing basic property insurance and to formulate and administer a program for the equitable apportionment among such insurers of such basic property insurance.

(5) "Urban Area" means any community having a blighted, deteriorated or deteriorating area which the Facility has designated with the approval of the Director, or which the Secretary of the U.S. Department of Housing and Urban Development has approved for an urban renewal project after a local public agency has been formed in the community to avail itself of a U.S. Housing and Urban Renewal Program, or which the Director of Insurance has designated.

(6) "Premiums Written" means the gross direct premiums charged with respect to property in this State on all policies of basic property insurance and the basic property insurance premium components of all multi-peril policies less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed portions of premium deposits.

(Source: P.A. 80-1365.)

(215 ILCS 5/524) (from Ch. 73, par. 1065.71)

Sec. 524. FAIR Plan Procedure. (1) Any person having an insurable interest in real or tangible personal property at a fixed location in an urban area who, after diligent effort has been unable to obtain basic property insurance, as evidenced by 3 attempts to procure such insurance, is entitled upon application to the Facility to an inspection and evaluation of the property by representatives of the Inspection Bureau.

(2) Any person who is an owner-resident of a one to four family dwelling unit at a fixed location in an urban area and whose residential real property insurance coverage has been nonrenewed through the voluntary insurance market shall be entitled to submit a binding application of coverage to the Facility for such period of time as is required by the Facility to conduct a reasonable inspection of the residential real property.

(3) The manner and scope of the inspection and evaluation report for nonresidential property shall be prescribed by the Facility with the approval of the Director. The inspection must include, but need not be limited to, pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken as part of the inspection.

(4) Promptly after the request for inspection is received an inspection must be made and an inspection report filed with the company or companies designated by the Facility. A copy of the completed inspection and evaluation report must be sent to the Facility and made available to the applicant and to insurers in the voluntary insurance market upon request.

(5) If the Inspection Bureau finds that the residential property meets the reasonable underwriting standards established under Section 525, the applicant shall be so informed in writing. If the residential property does not meet the criteria, the applicant shall be informed, in writing, of the reasons for the failure of the residential property to meet the criteria.

(6) If, at any time, the applicant makes improvements in the residential property or its condition which he or she believes are sufficient to make the residential property meet the criteria, a representative of the Inspection Bureau shall reinspect the residential property upon request. In any case, the applicant for residential property insurance shall be eligible for one reinspection any time beginning 60 days after his or her initial Fair plan inspection. If upon reinspection the residential property meets the reasonable underwriting standards established under Section 525, the applicant shall be so informed in writing.

(Source: P.A. 81-1430.)

(215 ILCS 5/525) (from Ch. 73, par. 1065.72)

Sec. 525. Industry Placement Program.)

(1) Within 30 days after the effective date of this Article, all insurers engaged in writing in this State, on a direct basis, basic property insurance or any property insurance component in multi-peril policies, other than local district, county and township mutual companies, must establish an Industry Placement Facility to formulate and administer a Program for the equitable apportionment among such insurers of basic property insurance which may be afforded applicants in urban areas whose property is insurable in accordance with reasonable underwriting standards, but who, after diligent efforts, are unable to procure such insurance through normal channels, as evidenced by 3 attempts to procure such insurance. The Program may also provide, with the approval of the Director, for the use of deductibles, percentage participation clauses and other underwriting devices and for assessment of all members in amounts sufficient to operate the Facility, and may establish maximum limits of liability to be placed through the Program, commissions to be paid to the license producer designated by the applicant and for relieving any company from accepting referrals under the FAIR Plan, in whole or in part, for reasonable cause. The Program may also provide that the Facility issue policies in its own name. The Program shall establish reasonable underwriting standards for determining insurability of a risk, subject to the approval of the Director.

(2) The Industry Placement Program, through its plan of operation, shall provide reasonable access and marketing procedures for (a) immediate binding of eligible risks; (b) premium installment payment plans; and, (c) establishing adequate marketing and service facilities in all designated urban areas of this State.

(3) Homeowners insurance coverage shall become part of the Industry Placement Program of basic property insurance. The Facility shall develop, with the consultation of the Director, a homeowners insurance contract(s) for urban areas. Such Program of homeowners insurance will be implemented through a plan of operation specifically entitling owner residents who have been nonrenewed through normal insurance channels of immediate binding coverage pending a reasonable period of time for the Facility to conduct an inspection of the premises to determine whether the premises comply with underwriting requirements set out in the Program.

(4) Each insurer, as a condition of its authority to transact such kinds of insurance in this State, must participate in the Industry Placement Program in accordance with this Article and such a plan of operation as may be established by a Governing Committee of 6 insurers elected annually in a manner provided in a membership agreement to be executed by each participating insurer, 4 members who are not employees of or otherwise affiliated with the insurance industry appointed by the Director to represent the interest of insurance consumers, and one member who is an Illinois licensed insurance producer appointed by the Director, who shall serve for terms consistent with the terms served by their counterparts from the insurance industry.

(Source: P.A. 88-667, eff. 9-16-94.)

(215 ILCS 5/525.1) (from Ch. 73, par. 1065.72-1)

Sec. 525.1. Centralized Operations Authorized.) (1) The Industry Placement Facility is authorized, for FAIR Plan purposes only, to issue policies of insurance and endorsements thereto in its own name or a trade name duly adopted for that purpose, and to act on behalf of all participating insurers in connection with said policies and otherwise in any manner necessary to accomplish the purposes of this Article, including but not limited to collection of premiums, issuance of cancellations, and payment of commissions, losses, judgments and expenses.

(2) The participating insurers shall be liable to the Facility as provided in this Article, the Program and any related Articles of Agreement for the expenses and liabilities so incurred by the Facility, and the Governing Committee shall make assessments against the participating insurers as required to meet such expenses and liabilities. In connection with any policy issued by the Facility: (a) the name and percentage participation of each participating insurer shall be made available to the insured upon request to the Facility; (b) service of any notice, proof of loss, legal process or other communication with respect to the policy may and shall be made upon the Facility; and (c) any action by the insured constituting a claim under the policy shall be brought only against the Facility, and the Facility shall be the proper party for all purposes in any action brought under or in connection with any such policy. The foregoing requirements shall be set forth in any policy issued by the Facility and the form and content of any such policy shall be subject to the approval of the Director of Insurance.

(3) The Facility is authorized to assume and cede reinsurance in conformity with the Program.

(4) (a) Each insurer must participate in the writings, expenses, profits and losses of the Facility in the proportion that its premiums written, with respect to each fund, bear to the aggregate premiums written by all insurers, with respect to each said fund, excluding that portion of the premiums written attributable to the operation of the Facility except as otherwise provided in this Section.

(b) The Director of Insurance shall by rule establish procedures for determining the net level of participation required of each insurer, which shall include the following elements:

(i) The designation of one or more contiguous ZIP CODE areas within this State wherein the insurers writing new policies upon risks which they do not insure prior to the effective date of this amendatory Act may receive credit against their obligation for FAIR Plan risks;

(ii) The minimum level of participation required of all insurers regardless of the amount of credit allowed but which in no case shall be less than 50% of that level of participation that would be required as defined in paragraph (a) above;

(iii) A designation of the type of risks for which credit may be allowed, provided that credit shall not apply to commercial risks where the annual premium for the policy exceeds $2,000 for each fixed location;

(iv) The maximum level of participation required of all insurers regardless of the amount of credit allowed.

(c) The procedures for determining levels of participation and all designations, formulas, minima and maxima required by this Section shall be reasonably designed to effect the intent of this Article without exempting any insurer from the participation requirement.

(5) Voting on administrative questions of the Facility shall be weighted in accordance with each insurers' premium written during the second preceding calendar year as disclosed in the reports filed by the insurer with the Director.

(6) The Facility may on its own initiative or at the request of the Director, amend its rules or Program, subject to approval by the Director.

(Source: P.A. 81-1426.)